Twitch: Any Experience Is Streamable – But Not Everything Is Monetizable

A few years ago, when Twitch CRO Jonathan Simpson-Bint would walk into meetings with agencies and advertisers, they’d cock a dubious eyebrow.

“That many people engage on Twitch? You’ve got to be kidding.’ That was the reaction,” said Simpson-Bint, who’s been with Twitch since 2011, three years before Amazon acquired the social gaming and live streaming platform for $1 billion. “It still blows my mind, and I’ve been here for five years. We spent a lot of time educating people, and I think we’re reaching a point where they get it now.”

Twitch averages more than 100 million viewers a month. Although daily active users only clock in at around 10 million, they usually visit twice a day and spend an average 111 daily minutes watching and commenting on others' game play.

But what makes Twitch attractive to advertisers – which is that it claims to reach half of millennial males in America – also makes it vulnerable. Millennial males are an audience that's almost synonymous with ad blocking.

In November, Twitch made an overture to current and potential advertisers with the rollout of SureStream, an ad delivery solution that stitches ads directly into streams, blocks third-party ad blockers and ensures smoother playback of ads.

Although Simpson-Bint declined to disclose the ad blocking rate on Twitch, he said that the audience has “been very accepting of SureStream and cool about it.” And if people want an ad-free experience on Twitch, they can always sign up for Twitch Prime, he said.

Viewer POV

The Twitch audience in general is “actually very aware of the value exchange taking place,” Simpson-Bint said. That’s because ad revenue is shared with the broadcasters and viewers are loyal to the creators of their favorite streams.

“It’s hard for fans to begrudge a broadcaster they love who’s very likely trying to make a living this way the 30 seconds it takes for an ad to play,” he said.

Broadcasters are also in control of which ads they run and of managing the ad load on their channels.

“It’s an interesting socioeconomic experiment,” Simpson-Bint said. “They know that more ads equals more money but probably less viewers over time. They need to figure out the tolerance of their own audience.”

socialeatingtwitchNot Just Playing Around

One thing Twitch isn’t yet giving advertisers is access to Amazon’s data. The Twitch sales org is kept completely separate from Amazon. “If we were going to do anything, it would have to deliver real quality,” said Simpson-Bint.

Roughly 90% of Twitch’s ad volume is sold direct, and it has a dedicated team it calls Advanced Media Services that creates solutions for its advertiser base, including a cost-per-install product for mobile game developers and a cost-per-acquisition product for companies like Netflix and Hulu.

Twitch also operates on a number of what Simpson-Bint called the “usual suspect” video exchanges (TubeMogul et al.).

Although game streaming is Twitch’s mainstay, users aren’t just there for games anymore. Now there are channels for cooking; channels for creative pursuits like sculpting, jewelry-making and writing; channels for cosplay; channels for body art. There are even channels for social eating.

“Any experience is streamable,” Simpson-Bint said. “We’ve found that if we allow it, people will do it. For a long time, our terms of service only allowed people to broadcast games content. But we’ve relaxed that a little here and there, and every time we do, the audience embraces it.”

But ad buyers also need to embrace that content – content that doesn’t always scream “brand-safe," although that’s not a big concern for the game and movie studio advertisers, or for edgier brands like Doritos and Old Spice that form the backbone of Twitter’s advertiser base.

Thinking Outside The Box

Video ads are Twitch’s bread and butter, including pre- and mid-roll (it also runs a limited assortment of IAB standard display units). But advertisers see the best results when they do something that’s crafted specifically for the Twitch community, said Simpson-Bint, who noted that the majority of Twitch’s ad revenue comes from custom campaigns and custom solutions.

jonathansimpsonbinttwitchA good example is USA Network, which partnered with Twitch in 2015 to launch the first season of its cyber-thriller TV series, Mr. Robot.

First, USA Network “hacked” into Twitch’s livestream of the Electronic Entertainment Expo, the video game industry’s largest trade fair, with mysterious messages teasing the show and the existence of a fictional hacking society whose stated mission was to erase more than $100,000 in consumer debt, which resonated with the Mr. Robot story line. Over the next 72 hours, Twitch users who watched a livestream of the hackers' activities could uncover codes redeemable for cash prizes.

“In a way, we act as consultants to brands to help them develop something authentic, something participatory,” Simpson-Bint said.

And on the mobile front, Twitch is now finally building out its app business after years of being rooted in desktop.

The Twitch audience is particularly responsive to game installs, a rich source of monetization. Most mobile ads are sold on a cost-per-install basis to mobile game companies seeking downloads.

Twitch doesn't disclose the size of its mobile audience, but Simpson-Brint describes it as a “significant portion.” The company now offers apps for iOS and Android as well as for console platforms PS4 and Xbox.

“It’s not about the platform to us as much as it’s about the experience that the broadcasters and viewers have,” Simpson-Bint said. “We just want them to have the best experience on every platform and to watch Twitch wherever they are, on whichever device is handy, whether that’s a giant TV, a laptop or an iPhone.”

 

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